Convergence Group Plc and Another v Chantrey Vellacott (A Firm)
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE LLOYD,THE HONOURABLE MR JUSTICE RIMER |
| Judgment Date | 31 July 2007 |
| Neutral Citation | [2007] EWHC 1774 (Ch),[2004] EWHC 1597 (Ch) |
| Docket Number | Case Nos: HC 01–02055 & HC 01–02056,CH/2004/PTA/0181 |
| Court | Chancery Division |
| Date | 31 July 2007 |
[2004] EWHC 1597 (Ch)
Mr. Justice Lloyd
CH/2004/PTA/0181
IN THE HIGH COURT OF JUSTICE
HANCERY DIVISION
Royal Courts of Justice
MR. M. CRANE Q.C. and MR. J. TAYLOR (instructed by Messrs. Squire & Co.) appeared on behalf of the Claimant.
MR. A. TEMPLE Q.C. and MR. S. BRANNIGAN (instructed by Messrs. Davies Arnold Cooper) appeared on behalf of the Defendants
(As approved by the Judge)
1. I have before me a number of applications in a claim which is of substantial nature and is moving, perhaps hitherto somewhat slowly, towards a substantial trial. In saying that I mean no criticism of anyone involved. It is a substantial matter. Proceedings were issued in 2001 and statements of case are already substantial. Time has been devoted to a number of pre-trial matters.
2. The first thing that is before me is an appeal against a decision of Master Price on 12th March 2004 which was on an application by the defendants to reamend their defence and counterclaim. The claimants are professionals who started the claim by suing for their fees. The real substance of the issue arises on the defence and counterclaim which is that the claimants were negligent in the performance of their duties. The claim is put both in contract and in tort.
3. The Master had an application for permission to amend the defence and counterclaim in quite a large number of respects, and he was not able to deal with all of the amendments for which permission was sought in the time that he had available. He dealt with a number of them and refused them. These were amendments to paras.9, 10.1, 55.1 and then in a short separate judgment para.11.1.
4. He made a number of critical comments about those various paragraphs. But the central ground on which he based his refusal of permission to amend was that the new material raised allegations which related to matters happening more than six years previously and in relation to which therefore it was said that if they were made the basis of a fresh claim issued on that date there would be a Limitation Act defence. So he had to consider the issue of whether the amendments fell within the provisions of CPR 17.4(2).
5. This relates to amendments to statements of case after the end of a relevant limitation period. It says that:
“The court may allow an amendment whose effect will be to add or substitute a new claim but only if the new claim arises out of the same facts or substantially the same facts as the claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
Then there are a couple of other subparagraphs that are not relevant on the facts of the present case.
6. The Master approached the matter by considering whether the amendments with which he was dealing did raise new material that fell within that rule, it being a common feature of all the amendments that he did consider that they would make allegations of negligence against the claimants in respect of periods of before November 1997.
7. In the pleading as it now stands, under an overall heading of the defective nature of the services provided by the claimant, Mr. Brannigan starts a story which begins in November 1996, which seems to be the date at which the defendants first sought the advice of the claimant in relation to the particular business project, in particular tax and accountancy advice as regards the organisation of the group that is the subject of the proceedings.
8. The initial approach is alleged in paras.7 and 8. At para.9 it is alleged that on a given date in November 1996 CV purported to provide initial advice. This was as to the particular kind of structure. The advice seems to have been that an intermediate holding company incorporated in Cyprus should be used to acquire further offshore companies.
9. That seems to have been superseded, as alleged in para.10, by more formal advice which was that the proposed intermediate holding company should be set up in Luxembourg instead of in Cyprus. Such a company was incorporated in Luxembourg, which is in fact the second defendant.
10. Then the story goes on at para.11 to allege that on
14th November 1997 the claimant provided further advice as to how the structure of the group could be altered to fulfil the objectives set out in the paragraph which describes the initial approach. Paragraph 12 sets out a number of key aspects of the proposed structure.
11. Then at para.13 the allegation is that from 14th November 1997 the claimant purported to implement that advice. On 9th March 1998 advice was given that the reorganisation was at a stage at which a position had to be taken as to when the intermediate holding company was to be incorporated. That goes on and advice is said to have been given in March 1998 and thereafter. The advice was sought to be clarified in June and further information was given in July 1998. In September 1998 it is said that defects in the structure that was being implemented were discovered and that led to dissatisfaction. That carried on through October.
12. In or about October the defendants instructed PriceWaterhouseCoopers to review the advice given by the claimants. They reported at the end of October. The advice that they gave, which was in some respects different from that which had been given by the claimants but in other respects the same, was followed and implemented.
13. The defendants then say that they were unable to proceed with the particular project that they wished because by the end of 1999, when they were in a position to proceed, market conditions were such that they were unable to obtain appropriate investment. They say at paras.52 and 53 that it was the claimant's duty to enable them to put a structure in place within a reasonable period from March 1998 and that that reasonable period would have been at its latest March 1999.
14. So at para.55 they allege that by reason of the above (the delay and the adverse movement of the market) the services provided by the claimant were provided in a manner which was negligent and/or in breach of contract and they give particulars.
15. At para.56 under the heading “The Defects in the Services provided up to June 1998” they say this:
“From November 1997 to March 1998 the claimant continually advised that the group adopt a reorganised structure which was defective [in a number of particular respects].”
In the subparagraphs they say the particular problem was the use of a Gibraltar registered tax exempt company which would have particular disadvantages, and the reliance on a view as to the effective use of a European economic interest grouping. Those were points that were raised for the first time in 1998. At (d) it is said:
“For those reasons the structure was unsuitable for and/or ignored and/or did not take proper account of the group's objectives and/or needs as set out in the group's communications of inter alia November 1996 [and then two communications in March 1998].”
16. At para.57 they proceed:
“Further or alternatively the advice provided during that period was incorrect and/or negligent.”
Then other reasons are given for saying it was incorrect and/or negligent. Those relate to the use of EEIG's and the Gibraltar registered company. So again those are matters that arose in and after March 1998 for the first time.
17. Again, subparagraph (e) says:
“For those reasons it ignored and/or did not take proper account of the group's objectives and/or needs as set out in the group's communications of November 1996 [and the two of March 1998].”
Then they carry on with defects in the service provided by the claimant after that period. They cover specifically periods in 1998 going through to the end of 1998 and into 1999.
18. Then we come to two paragraphs headed “General Defects in the Services”. Paragraph 73 is one that has no particular relevance to the present appeal. Paragraph 74 is this:
“Generally the claimant failed at all materials times to provide advice within a reasonable time and/or in accordance with the needs and objectives of the group and failed to keep and/or provide sufficient records to allow the group to ascertain precisely what steps had and had not been taken on its behalf to implement such advice in that period.”
Then three subparagraphs are set out which I do not need to mention. They speak in general terms of the sort of subject matter that had been covered in more detail previously.
19. By the proposed amendment to para.9 (which is the one that had the perhaps slightly unclear phrase “purported to be provided by”) it is sought to add a sentence saying that advice was cursory in nature and insufficient to enable the group to make an informed decision. It carries on with some words that
I need not quote.
20. Paragraph 10.1, which at the moment contains nothing by way of an allegation of negligence or breach of duty, is sought to be expanded by an allegation that the advice which was given in November and early December 1996 was given effectively without proper consideration and research. I summarise the effect of four subparagraphs.
21. Paragraph 55.1 ties in with those to some extent, and would be added before para.56 which starts “From November 1997 to March/April 1998”. The new para.55.1 would say this:
“Up to November 1997 the claimants failed to consider properly the requirements of the group or the international structure most appropriate …”
So that is an allegation of negligence up to November 1997, just as the proposed additions to paras.9 and 10 are...
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